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Child Support Agreements
An alternative to an Administrative Assessment is for parents to enter into a private Child Support Agreement that sets out the child support they have agreed upon.
There are two types of Child Support Agreements being:
(a) A Binding Child Support Agreement (BCSA); and
(b) A Limited Child Support Agreement (LCSA).
Binding Child Support Agreements
Parents entering into a BCSA must obtain independent legal advice and the BCSA must contain a certificate in which the parents’ legal advisors specifically certify that they have provided certain advice to the parents.
Under a BCSA, the support amount agreed by the parents can be for more or less than the Administrative Assessment for child support. An Administrative Assessment does not need to be in place before the parents enter into a BCSA.
A BCSA may contemplate the payment of a lump sum in lieu of a periodic child support payment; however there are disadvantages to approaching child support in this manner.
To terminate a BCSA prior to the end date, the parents must seek independent legal advice and enter into a formal Termination Agreement or a new BCSA that terminates the previous BCSA.
If only one parent seeks to terminate an agreement, then they may seek an order from the relevant court. This will only be granted in very limited circumstances such as where there has been fraud, failure to disclose, or undue influence, amongst other things. The court will not terminate such an agreement upon the mere whim of a party.
Limited Child Support Agreements
An LCSA does not require independent legal advice before the LCSA is signed. However, an LCSA requires there to be an assessment already in place and the LCSA must be for at least the amount of the existing Administrative Assessment.
If both parents wish to end an LCSA, they can do so by making a new LCSA, or simply agreeing in writing to end the existing LCSA.
If parents do choose to enter into an LCSA, they can increase the likely longevity of an LCSA by addressing possible changes in circumstances within the LCSA. In the event an Administrative Assessment changes by more than 15 percent, either parent may terminate an LCSA.
Either parent may unilaterally terminate an LCSA if it is three or more years old.
It should be noted that in relation to both types of Agreements, the Family Tax Benefit A will be payable as though the Agreement had not been made, on the basis of a notional assessment.
Any child support a parent receives either through an assessment or private child support agreement may affect a parents Family Tax Benefit A payments.
